Asia-Pacific Transfer Pricing Handbook

Chapter Twenty-Five

Singapore Transfer Pricing Consultation Process

The Inland Revenue Authority of Singapore (IRAS) provided taxpayers with a Transfer Pricing Consultation study on July 30, 2008, revising the study on August 6, 2008 (the study). The 2008 study implements the February 2006 Transfer Pricing Guidelines Circular.1 The IRAS issued the study primarily to buttress the documentation facets of the Transfer Pricing Guidelines Circular. This study explains how the IRAS carries out its transfer pricing “Consultation.” Note that an IRAS “consultation” can result in a full-fledged tax audit plus professional advice provided by the Singapore tax authorities to the taxpayer.

BACKGROUND

The IRAS issued its Transfer Pricing Guideline Circular in February 2006, doing so to provide guidance to Singapore taxpayers on applying the arm’s length principle.2 The IRAS guidelines provide Singapore taxpayers with key concepts and with guiding principles, with the purpose of preparing and maintaining adequate documentation. The principal objective of preparing and maintaining transfer pricing documentation is to place the taxpayer in a position in which the taxpayer can readily demonstrate that it has “exerted reasonable efforts” to ensure that its transfer prices are consistent with the arm’s length principle.3 Section 4 in the 2006 circular provides specific documentation guidelines.

The IRAS has formalized its consultative process with Singapore taxpayers in its issuance of the study. ...